Fianna Fáil has published legislation that it says, if implemented, would allow the Government to reduce “exorbitant” pensions paid to retired bank executives by up to 40 per cent.
The party's finance spokesman Michael McGrath TD said the legislation was deliverable and that legal advice received suggested it would stand the test of a constitutional challenge.
A reduction applied to retired public servants, a 20 per cent cut on pensions above €100,000, had been taken as a starting point when drafting the legislation and Mr McGrath said he believed this meant the Government could not object "in any reasonable way" to the proposals.
Under the legislation, which would apply to institutions covered by the State, pensions of €100,000 to €150,000 would be reduced by 20 per cent.
Pensions of €150,000 to €200,000 would be cut by 30 per cent and amounts in excess of that would fall by 40 per cent.
"We'll be asking the Government now to back up their words of outrage and condemnation we have heard in recent weeks and actually enact this piece of legislation as quickly as possible," Mr McGrath said.
Members of the public, he said, were "horrified" to learn of the scale of some pension payments and were now expected to take further cuts to their standard of living in next month's budget.
Earlier this month, Minister for Finance Michael Noonan said he was powerless to rein in the pay and pensions of senior bankers, which the Taoiseach Enda Kenny told the Dáil were "utterly exorbitant" and "extraordinary".
Mr Kenny said banks had a "moral responsibility" to reduce their retirement payments given what had transpired in the sector in recent years.
Since then, former AIB chief executive Eugene Sheehy has agreed to take a cut in his annual pension to €250,000.
It was recently reported that AIB had used some of the €1.1 billion it got from the State to fund pension payments. Mr McGrath said he was seeking to establish if there had been bailouts in other covered institutions.
Asked if Fianna Fáil was attempting to cover for decisions made during its time in government by introducing the legislation, Mr McGrath disagreed, saying the arrangements in many cases were between the banks and the executives, and predated State intervention in the sector.
